JKAU: Islamic Econ., Vol. 19, No. 1, pp: 21-34 (2006 A.D/1427 A.H) Must Money Be Limited to Only Gold and Silver?: A Survey of Fiqhi Opinions and Some Implications(1) MUHAMMAD ASLAM HANEEF and EMAD RAFIQ BARAKAT Associate Professor, Department of Economics International Islamic University Malaysia, and Assistant Professor Department of Islamic Economics and Banking Yarmouk University, Jordan ABSTRACT. This paper attempts to provide a survey into the issue of money in Islam. Specifically, it looks at the views of Muslim scholars (primarily past fiqh scholars), on whether money has to be limited to gold and silver or not and discusses some implications of the findings of this brief survey on present day opinions. In this connection it discusses some general points on gold and silver as money, from a historical and ‘contextual’ perspective, followed by some points that are agreed upon by the majority of scholars. It also compares the views of scholars who take the position that only gold and silver can be used as money and the evidences given to support their stand with the views of those who do not limit money to only gold and silver, together with their evidences. 1. Introduction The discussion of money is certainly as old as the economics discipline itself. Early definitions of the discipline were even focused on money/wealth while most measurements today in economics are based on some money value. In the years since the 1997/98 financial crisis, there has been a renewed interest in and perception popularised by some that the Islamic currency as sanctioned in the shari’ah is gold and silver.(2) The crisis created renewed interest in the discussions and debates on money, the monetary system and even calls for a new international financial architecture. While 1. This is an expanded and revised version of a paper ‘Gold and Silver as Money: A Preliminary Survey of Fiqhi Opinions and Some Implications’ presented at the International Conference on Stable and Just Monetary System, held in Kuala Lumpur, August, 2002. The authors acknowledge the comments given before and during the Conference and by the editors of the Journal. 2. See for example Umar Ibrahim Vadillo, ‘The Return of the Islamic Gold Dinar’, Madinah Press, Cape Town, 2002; see also papers presented at the International Conference on Stable and Just Global Monetary System-Viability of the Islamic Dinar, August 19-20, 2002, Kuala Lumpur. 21 22 Muhammad Aslam Haneef and Emad Rafiq Barakat initial interest in these areas has declined in the last two years, the discussion of gold and silver as money or backing money continues to take place among some. On the other hand, contemporary Islamic economic literature written since the 1970s seems to have implicitly accepted the existing monetary system based on fiat money. While views on this issue are varied, there is general agreement that the present monetary system has led to instability and created various injustices, especially to the economies of developing countries. It gave a renewed life to the presumption made by some earlier scholars and popularized by others, that the present monetary system is not in line with Islam and should be replaced by a system where gold and silver is used as money. Others however feel using gold and silver may not necessarily be the solution nor is it required by the shari’ah. This paper attempts to provide a survey into the issue of money in Islam. Specifically, it looks at the views of Muslim scholars (primarily past fiqh scholars), on whether money has to be limited to gold and silver or not and discusses some implications of the findings of this brief survey on present day opinions. 2. Objectives and Outline of the Paper This paper has the following modest objectives. 1. To present the fiqh views of Islamic scholars, mainly past scholars, on the issue of gold and silver as money. 2. To highlight the evidences put forward by the scholars to support their views. 3. To compare and contrast the views of the scholars. 4. To discuss certain implications of these views for further research. Section 3 will discuss some general points on gold and silver as money, from a historical and ‘contextual’ perspective, followed by some points that are agreed upon by the majority of scholars. Section 4 presents the views of scholars who take the position that only gold and silver can be used as money and the evidences given to support their stand. Section 5 gives the views of those who do not limit money to only gold and silver, together with their evidences, while section 6 discusses some issues and analyses possible implications of these two schools. Section 7 concludes. One qualifying point that needs to be mentioned at this juncture is that this paper is written by two economists surveying generally secondary texts on the ‘juristic’ views of scholars, hence the limitations of cross-disciplinary studies. The discussion by economists, especially contemporary Islamic economists writing in the English language, rarely touch on the issue of gold and silver. Instead, most works seem to accept the fiat-money system, albeit with reservations. While early works of contemporary Islamic economists in the late 70s did attempt to bring in discussions on this issue, this has not produced any work, to the knowledge of the writers, surveying and analyzing the opinions among Muslim scholars on the subject, especially in the English language.(3) 3. See for example Munawar Iqbal and M.Fahim Khan (1981), A Survey of Issues and a Programme for Research in Monetary and Fiscal Economics of Islam, International Centre for Research in Islamic Economics, Jeddah; Muhammad Ariff (1982, ed.), Monetary and Fiscal Economics of Islam, ICRIE, Jeddah; M.N. Siddiqi (1983), Issues in Islamic Banking, Islamic Foundation, Leicester; M.U. Chapra (1985), Towards a Just Monetary System, Islamic Foundation, Leicester. Must Money Be Limited to Only Gold and Silver… 23 3. Views on Gold and Silver as Money: General Discussion and Points of Agreement The discussion of money by Muslim scholars can be traced back to the earliest period of Muslim history. The discussion in that period focused on issues relating to the laws on riba, zakah, exchange, sales, loans, leasing etc. The scholars discussing these issues were not looking at them from a purely economic perspective and consisted of jurists, the scholars of tafsir and hadith as well as historians. According to al-Maqrizi, the issue of debasement of money (gold and silver) first occurred in the year 64 A.H.(4) It would seem logical that the fuqaha’ of the time would have had their opinion on this issue. When discussing the issue of money, it must also be kept in mind that the views of scholars were also influenced by the ‘state of the monetary system’ of their time. By this we mean that scholars writing in the early part of Muslim history were exposed to gold and silver as the main forms of money, although some limited amounts of copper based money (fulus) were in circulation. Therefore, one could conclude that other forms of money did not pose an issue or create economic problems then. For example, Ibn Taymiyyah (d. 728 A.H) accepted fulus as money at a time when it was not used as the major form of money.(5) He says: “The authority should mint the ‘fulus’ coins (other than gold and silver) according to the just value of people’s transactions, without any injustice to them”.(6) Ibn al-Qayyim ( d. 751 AH), a disciple of Ibn Taymiyyah followed his teacher in this regard(7) and did not limit money to one item. Hence, the problem of inflation during their time could be solved by changing the debased type of fulus with one of better quality.(8) However, as economic activity progressed and the use of copper based money became more prevalent, for example in the time of the Circassian Mamluks (after 784AH/ 1382AD), scholars were increasingly faced with problems associated with the extensive use of copper based money. For example, Ibn Khaldun (d 808 A.H) and his disciple al-Maqrizi (d. 845 A.H), confined money to only “ the two mineral stones” gold and silver.(9) Al-Maqrizi says: “…the currency that has been used to determine prices of goods and cost of labor consists only of gold and silver”.(10) 4. Taqi al-Din Ahmad ibn Ali, Al-Maqrizi, Igathah al-Ummah bi-Kashf al-Ghummah, Maktabah al- Thaqafah al-Diniyyah, Bur Sa’id, 2000, p 84. Al-Maqrizi states “ It is said that the first to have debased dirhams and minted them adultrated and of mediocre alloy was ‘Ubayd Allah ibn Ziyad, when he escaped from Basrah in the year 64/683-84.” See Adel Allouche, Mamluk Economics- A Study and Translation of Al-Maqrizi’s Igathah, University of Utah Press, 1994. p 65. 5. Ibn Taymiyyah, Shaykh al-Islam Taqi al-Din Ahmad ibn ‘Abd al-Halim, Majmu‘ Fatawa Shaykh al-Islam Ibn Taymiyyah, Dar al-Kutub al-‘Ilmiyyah, Beirut, 1987, vol.19, pp. 249-252. 6. Abdul Azim Islahi, Economic Concepts of Ibn Taimiyah, The Islamic Foundation, Leicester, U.K., 1988/1408H, p. 141. 7. Shams al-Din Abi ‘Abd al-Allah, Ibn al-Qayyim, I‘lam al-Muwaqqi‘in ‘an Rabb al-‘Alamin, Dar al-Jil, Beirut, vol. 2, p. 156.(n.d.). 8. This event occurs in the year 724 A.H. in Cairo. Al-Maqrizi in his book al-Suluk gives a detailed description of the crisis faced and the policy of introducing the new type of fulus by the state.